According to Dark Reading, text scam losses reported to the Federal Trade Commission reached $470 million in 2024, representing a fivefold increase from 2020 levels. The Aspen Policy Academy has launched a Cyber Civic Engagement program backed by Craig Newmark Philanthropies to train community cybersecurity advocates and improve communication with government leaders. Betsy Cooper, the academy’s founding director, emphasized that government action is crucial for prevention, particularly around regulating Google ads that lead to fraudulent sites. Allison Pytlak of the Stimson Center described the current government approach as “fragmented,” noting that traditional law enforcement isn’t equipped to handle the scam phenomenon effectively. As the situation reaches a “tipping point,” experts are calling for a whole-of-society approach to combat the escalating threat.
The Business of Scams: A Multi-Billion Dollar Industry
The staggering $470 million in reported text scam losses represents just the visible tip of a much larger iceberg. FTC data reveals this figure only includes incidents where victims recognized they’d been scammed and knew where to report it. The actual economic impact likely extends into the billions when accounting for unreported cases, secondary financial consequences, and the massive infrastructure costs borne by financial institutions and telecommunications companies. What makes this particularly concerning from a business perspective is the scalability of these operations – scammers can target thousands of victims simultaneously with minimal incremental cost, creating profit margins that legitimate businesses would envy.
Where Regulation Falls Short
The fragmented government response stems from fundamental jurisdictional and regulatory gaps that scammers expertly exploit. Financial institutions operate under one set of regulations, telecommunications companies under another, and digital platforms like Google operate in a largely self-regulated advertising ecosystem. This creates perfect conditions for what security professionals call “regulatory arbitrage” – scammers simply move their operations to the least regulated part of the chain. The FBI’s Internet Crime Complaint Center data shows similar patterns across different scam types, suggesting systemic rather than isolated failures. Until regulators coordinate across these silos, scammers will continue to find and exploit the weakest links.
The Private Sector’s Role in Prevention
Financial institutions and technology platforms bear significant responsibility in the scam ecosystem, whether they acknowledge it or not. Banks see unusual transaction patterns daily but often lack the mandate or incentive to intervene beyond basic fraud alerts. Technology platforms profit from advertising revenue regardless of whether the ads lead to legitimate services or sophisticated scams. The business models of these companies aren’t aligned with comprehensive scam prevention – it’s often cheaper to deal with occasional complaints than to implement robust verification systems. This creates what economists call a “negative externality” where the true costs of scams are borne by consumers and society rather than the platforms facilitating them.
Strategic Implications for Business Leaders
For executives across industries, the scam epidemic presents both risks and opportunities. Companies that proactively implement stronger verification processes and consumer protection measures can differentiate themselves in markets where trust is becoming increasingly scarce. The financial services sector faces particular pressure to balance security with user experience – too many friction points drive customers away, while too few create vulnerability. We’re likely to see emerging business models around digital identity verification and transaction monitoring as regulatory expectations evolve. Smart companies will view this not as compliance burden but as competitive advantage in building customer trust.
The AI Acceleration Threat
Artificial intelligence represents the next frontier in the scam arms race, and current defenses are woefully unprepared. AI can generate convincing fake personas, create personalized phishing messages at scale, and even mimic voices of trusted contacts. The business impact extends beyond direct financial losses to include reputational damage, regulatory scrutiny, and increased insurance premiums. Companies that invest now in AI-powered detection systems and employee training will be better positioned when these threats become mainstream. The window for proactive measures is closing rapidly as scammers increasingly leverage the same technologies that legitimate businesses use for customer service and marketing.
Building a Coordinated Defense
The solution requires breaking down traditional boundaries between government agencies, private companies, and consumer advocates. We need information-sharing frameworks that allow banks to alert telecommunications companies about scam patterns, and vice versa, without running afoul of privacy regulations. Insurance companies could play a role by offering premium discounts for businesses that implement certified anti-scam measures. Most importantly, we need clear metrics and accountability – which companies and agencies are effectively reducing scams, and which are merely checking compliance boxes. Until we treat scam prevention as a shared business imperative rather than someone else’s problem, the economic losses will continue to mount.
